Whether your employer gives out year-end bonuses or you work for yourself and have money left in the business at year-end, you should plan now for what you will do with it. You can pay off debt, put it in savings, or spend it; but if you wait until the money is in hand, chances are you will just spend it. That’s why you need to make a plan now that will force you to make good decisions later.

So what to do? You think you’re going to have a chunk of change burning a hole in your pocket come December, and there is a whole litany of things you need/want. Like any other financial decision in your life—prioritize and execute. Decide what your financial priorities are, and then execute a plan to move the needle with those priorities.

At the top of that list should be consumer debt—get rid of that credit card balance. Now, I’m talking about pre-existing debt. Don’t create a problem so that you can hopefully solve it with your year-end bonus. If you assume you are getting a bonus, it is not an excuse to rack up a credit card bill on Christmas shopping that you assume you’ll be able to pay off.

Past that, all other debt—car note, student loans, mortgage—comes into play. You should already have a plan in place to take care of these balances. But anything extra from a bonus will speed up that process and save you money along the way. And you should also save at least part of it, if for no other reason than to reinforce the tough habit of saving.

There is a reason this habit is so difficult. In fact, Prudential did a study and has dubbed it the “longevity disconnect bias,” which is the idea that the reward for saving—enjoying a lifetime of wealth accumulation—seems so far away that it’s almost like giving your money to a stranger. Their study that found 56% of adults views their “future selves” in this way, but don’t buy into this bias.

Finally, you should enjoy the money. If you have taken care of some basic financial priorities like debt and saving, then you should absolutely spend some money on yourself guilt-free. That’s the beauty of having a plan—if you have taken care of the priorities, you are free to use the remainder however you want.

Josh Norris is an Investment Advisory Representative of LeFleur Financial. Josh can be reached at josh@LeFleurFinancial.com.

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